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WASHINGTON — When former New York Mayor Rudy Giuliani urged President Bush to make Bernard Kerik the next secretary of homeland security, White House aides knew Kerik as the take-charge top cop from Sept. 11, 2001. But it did not take them long to compile an extensive dossier of damaging information.

They learned about questionable financial deals, an ethics violation, allegations of mismanagement and a top deputy prosecuted for corruption.

Most disturbing, according to people close to the process, was Kerik’s friendship with a businessman linked to organized crime. The businessman had told federal authorities Kerik received gifts, including $165,000 in apartment renovations, from a New Jersey family with alleged Mafia ties.

Alarmed, several White House aides tried to raise red flags. But the normal investigation process was short-circuited, the sources said.

Bush’s top lawyer, Alberto Gonzales, took charge of the vetting, repeatedly grilling Kerik about the issues. In the end, the White House moved forward with his nomination — only to have it collapse a week later.

August 1998: A New Jersey judge issues an arrest warrant for unpaid bills on Kerik’s East Rutherford condominium. Kerik’s lawyers said he did not know about the warrant.

February 2002: New York City’s Conflicts of Interest Board fines Kerik $2,500 for using NYPD officers to research his memoir.

May 2003: Bush administration sends Kerik to Iraq to organize new Iraqi police force. Kerik draws criticism for spending time on night raids with a paramilitary group. He leaves after three months.

November 2004: Kerik sells $6.2 million in stock in Taser International, which makes high-voltage stun guns. Kerik joined its board after leaving the NYPD in 2002, and the city and Homeland Security Department had purchased the company’s guns.

Dec. 10, 2004: A week after President Bush nominates him as secretary of the Department of Homeland Security, Kerik withdraws, after news reports about his hiring an undocumented nanny.

September 2005: Kerik exercises Fifth Amendment right against self-incrimination before a New Jersey gaming authority about his relationship to a company that renovated his Bronx apartment.

June 2006: Facing charges he accepted more than $165,000 in apartment renovations from a city contractor under investigation for potential ties to organized crime, Kerik pleads guilty to two misdemeanor charges and pays $221,000 in fines. The city removes Kerik’s name from a Manhattan detention center dedicated to him.

August 2006: The FBI investigates Kerik over $1 million missing from a city Correction Department charity funded by rebates on cigarettes sold to Rikers Island inmates.

September 2006: Wiretaps record Kerik talking with Jeanine Pirro, then Republican candidate for state attorney general, about possibly planting a recording device on her husband’s boat.

Newsday

The selection of Kerik in December 2004 for one of the most sensitive posts in government became an acute but brief embarrassment for Bush at the start of his second term.

More than two years later, it has re-emerged as part of a federal criminal investigation of Kerik that raises questions about decisions made by the president, the Republican front-runner to replace him and the embattled attorney general.

A reconstruction of the failed nomination, assembled through interviews with key players, provides new details and a fuller account of the episode — how Giuliani put forward a flawed candidate, how Bush rushed the usual process in his eagerness to install a political ally and how Gonzales, as White House counsel, failed to stop the nomination.

“The vetting process clearly broke down,” a senior White House official said. “This should not happen.”

Federal prosecutors have told Kerik they are likely to charge him with several felonies, including providing false information to the government when Bush nominated him, sources have told The Washington Post.

Kerik recently turned down a proposed agreement in which he would plead guilty and serve prison time because, his attorney said, he would not “plead to something that he didn’t do.”

The investigation has put Giuliani’s relationship with Kerik back in the spotlight.

“I should have done a better job of investigating him, vetting him,” Giuliani said during an appearance in Florida last weekend. “It’s my responsibility, and I’ve learned from it.”

The White House explanation has shifted significantly. After Kerik withdrew, then-White House spokesman Scott McClellan said “we have no reason to believe” he lied and it “would be an inaccurate impression” to say the vetting was rushed.

Mistakes and lies

Current and former White House officials now assert Kerik lied “baldfaced,” as one put it, and say they erred by speeding up the nomination.

“There is no question the mayor’s support for Kerik was important,” White House spokesman Tony Fratto said. “But Kerik was also known to some degree within the administration for his work in Iraq. If we had this to do over again, it certainly would have been done differently.”

Bush first met Kerik in the debris of the World Trade Center and was so impressed by his can-do persona that he later sent him to Iraq to train police. By 2004, Kerik was sent to the Democratic National Convention in Boston as part of an opposition war room, given a prime speaking slot at the Republican National Convention and tapped to appear with the president on the campaign trail.

Kerik did not fit the button-down model of the Bush administration. A high-school dropout and son of a prostitute apparently killed by her pimp, Kerik became an undercover narcotics detective with a ponytail and diamond earrings.

He joined Giuliani’s 1993 campaign as his driver and was later given top appointments, including corrections commissioner and eventually police commissioner. After office, Giuliani and Kerik became partners in a security consulting firm.

So when Giuliani phoned Bush to recommend he make Kerik his second-term homeland-security secretary, the president jumped at the idea. Only a few aides, including then-chief of staff Andrew Card and senior adviser Karl Rove, were clued in to Bush’s decision.

Kerik was given detailed financial-disclosure and personal-history questionnaires, all intended to unearth anything embarrassing. Giuliani’s firm assisted in filling out the forms, according to a source familiar with the situation, and the papers are now an issue in the federal criminal investigation.

Presidential nominees typically go through a full-fledged FBI background investigation before appointments are announced but are vetted only by the White House counsel’s office before being made public. The FBI then conducts its full probe before Senate confirmation hearings.

Vetting depends heavily on honest responses from a nominee, officials said. Yet in Kerik’s case, a quick FBI search and research by the White House turned up a host of problems before the nomination was announced. According to the sources, Bush aides discovered that:

• Kerik was fined $2,500 by New York for using police detectives to help him with his autobiography.

He also was a defendant in a civil lawsuit accusing him of retaliation against a corrections official who had disciplined a female prison guard with whom Kerik was having a relationship. Kerik was scheduled to give a deposition in the case right after his nomination was to be announced.

• One of Kerik’s former top deputies was convicted of stealing money from a foundation Kerik ran while serving as Giuliani’s corrections chief. The foundation was funded by rebates from tobacco companies selling cigarettes to prison inmates.

• Kerik, who filed for bankruptcy as a policeman, became rich almost overnight after leaving office. Just before his nomination, he made a quick $6.2 million by exercising stock options from his service on the board of Taser International, a stun-gun firm seeking business with homeland-security agencies.

Iraqis also questioned why Kerik spent tens of millions of dollars to buy weapons for Iraqi trainees when the U.S. military had confiscated plenty of such weapons after the invasion.

“There were alarm bells all around,” a former White House official said.

The loudest alarm bell was Kerik’s relationship with Lawrence Ray. The best man at Kerik’s wedding in 1998, Ray went to work for a New Jersey construction company, Interstate Industrial, that was seeking a big New York contract and trying to overcome concerns inside Giuliani’s administration that it had mob ties.

Ray was indicted in 2000 along with organized-crime figures in what prosecutors described as a scheme to manipulate the stock market. He pleaded guilty and was spared prison time.

The White House had the perfect person to question Kerik about his relationship with Ray: Julie Myers, who had worked in the same U.S. Attorney’s Office in Brooklyn that prosecuted Ray. She flagged the relationship and other concerns about Kerik, sources said. She aggressively questioned Kerik about Ray and other affiliations. He bristled at her tone, sources said.

In an interview last week, Ray said he had told the FBI and U.S. Attorney’s Office as early as 1999, as he tried to stave off indictment, that he had incriminating information about Kerik. After his guilty plea in 2001, Ray said, he told the FBI that Kerik had agreed to help Interstate Industrial and its owners, the DiTomasso family, try to win city business despite their alleged ties with organized crime. At the time, Kerik solicited and received gifts from company sources, including $165,000 in renovations for his apartment.

“They knew 100 percent of it,” Ray said. “There was no way they didn’t. I was driving the ball on that.”

Kerik told the White House the allegations were untrue, sources said. Myers, presidential personnel director Dina Powell and others in the West Wing were “very, very adamant about how serious the vetting needed to be,” one source said.

Gonzales, then the White House counsel, took charge of questioning Kerik, grilling him for hours on several occasions, the sources said. Nanette Everson, then the White House ethics counsel, was kept on the sideline for the heavy-duty part of the vetting.

In the end, White House officials knew Kerik had been head of the nation’s largest police department and had a security clearance for his work in Iraq. He was a hero of 9/11. He was well-liked by the president. No one checked with key officials at the Homeland Security, Defense or State departments. Even within the White House, the choice was kept secret so Bush could make a splash.

“The loop on it was extremely small,” a former official said.

Bush summoned Kerik to the Oval Office for a perfunctory interview Dec. 1 and, without asking policy questions, asked if he wanted to be homeland-security secretary. Kerik accepted. “He told me he wanted someone to go in there and ‘break some china,’ ” Kerik later told New York magazine.

Kerik called Giuliani to tell him the news. Two days later, Bush and Kerik appeared together to make the nomination public. Only then did the china start to break.

Initial reviews were positive. New York’s senators, Hillary Rodham Clinton and Charles Schumer, issued praise. But calls began pouring in to the White House and to the media.

Dirty laundry

Stories began circulating about Kerik’s time in Iraq and Saudi Arabia, about an arrest warrant issued when he failed to respond to a civil lawsuit, about his extramarital affair with book publisher Judith Regan, about his trysts in a city apartment meant as a place for police officials to rest near Ground Zero.

Ray went public with his allegations. Kerik and the White House tried to ride it out. Giuliani advised Kerik through the political storm.

But Giuliani’s firm then discovered Kerik had not paid Social Security taxes for a nanny who apparently was an illegal immigrant, Kerik later said.

By Kerik’s account, Giuliani told him he had to call the White House; by the end of the day Dec. 10, they agreed he had to pull out. Statements were issued after the evening news, and Giuliani consoled his friend.

“I made some major mistakes, and they catch up to you,” Kerik told New York magazine months later. “I didn’t focus enough on ethical issues. But I still believe that my successes over my 30-year career outweigh the errors in judgment.”

Except for the nanny, he said, “everything that’s come out is stuff I either told the White House about or they already knew.”

But more was to come. After Kerik withdrew, Ray became the central witness in several investigations. The New York Department of Investigation and the Bronx district attorney’s office opened probes into Kerik’s gifts using wiretaps, grand-jury testimony and numerous e-mails Ray gave them.

New Jersey gambling-enforcement authorities also filed a complaint in 2005 accusing Kerik of misusing his Giuliani administration job to solicit gifts from the DiTomassos while helping them try to win city business.

Kerik asserted his Fifth Amendment right not to answer some questions in the proceedings. He pleaded guilty to two misdemeanors in New York court last summer, acknowledging he had accepted the apartment renovations.

In the White House, there is still resentment toward Giuliani for foisting the problem on the president. “There are two people who are to blame for what happened — Rudy Giuliani and Bernie Kerik,” one former White House official said.

Still, a senior administration official acknowledged some responsibility as well. Bush wanted “a hard-charging personality” to get the department in line, he said. “Instead, we ended up shooting ourselves in the foot.”